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Tax News and Developments February 2024

In brief

On 29 January 2024, the OECD issued the first statistics on the International Compliance Assurance Programme (ICAP). These statistics cover all 20 ICAP cases completed since the beginning of the program in 2018 through October 2023.

Background of ICAP

ICAP is a voluntary program launched by the OECD in 2018 and is seen as complementary to other dispute resolution measures (APA, MAP, tax audits). Currently, 23 jurisdictions participate in ICAP, with Portugal having joined in early 2024, and others in discussion to join. An ICAP risk assessment can cover both transfer pricing and other international tax risks (e.g., permanent establishment (PEs), withholding taxes, treaty benefits, etc.). Under ICAP, tax authorities usually consider one or two of a taxpayer’s most recent periods plus two roll-forward periods.

The main difference between ICAP and other measures is the level of certainty for the taxpayer. ICAP does not provide legal certainty in the form of a binding agreement like an APA or MAP. Through ICAP, a taxpayer may only obtain “comfort” from a participating tax administration that it “does not anticipate that compliance resources will be dedicated to a further review of covered risks for a defined period.” The letter may also contain qualifications and is not binding for the tax administration. As part of the ICAP review, a tax administration may also refuse to provide such comfort and instead recommend an APA and/or follow with a tax audit.

The OECD encourages taxpayers interested in filing for ICAP to reach out to the tax administration of their group’s headquarters. Applications for ICAP are to be filed by one of two annual deadlines – 31 March or 30 September. There are no user fees for participating in this program.

ICAP statistics key takeaways

Tax administrations

The tax administrations currently participating in ICAP include Argentina, Australia, Austria, Belgium, Canada, Chile, Colombia, Denmark, Finland, France, Germany, Ireland, Italy, Japan, Luxembourg, the Netherlands, Norway, Poland, Portugal, Singapore, Spain, the United Kingdom, and the United States. Beneficially, the ICAP program provides taxpayers with US transactions with an opportunity to engage on a multilateral basis with countries that do not have a treaty with the United States (e.g., Argentina, Colombia and Singapore).

For the ICAP process, at least three jurisdictions are required to participate. According to the OECD, the optimal number of countries is between four to eight in one ICAP review. In practice, the average number of tax administrations involved in the 20 ICAP cases was five, with the largest case involving nine tax administrations.

Risk areas covered by ICAP risk assessment

As noted above, ICAP is suitable for dealing with a broad spectrum of international tax risks, requiring an understanding on behalf of the ICAP tax administrations of the taxpayer’s cross-border transactions, global value chain, and tax policies.

Based on the OECD statistics, ICAP has primarily focused on five main areas of international tax risks: tangible goods, intangibles, services, financing and PEs, though other risk areas were also addressed in a limited number of cases. The assessment of whether to include an international transaction or risk area in an ICAP risk assessment will be made on an individual basis and may depend on, for example, whether a transaction is already covered by an APA, the complexity of the transaction, and the materiality of the transaction.

Of these five main risk areas, PE issues received the highest proportion of low-risk assessments. In particular, 95% of PE issues received low-risk assessments, followed by 90% of tangible goods transactions, 88% of services transactions, 76% of financing transactions, and 75% of intangibles transactions receiving low-risk assessments.

ICAP risk assessment outcomes

Under ICAP, the participating tax administrations will review each of the relevant risk areas to assess whether they are low-risk or not low-risk. Transactions will be deemed low-risk where the tax administrations conclude that additional inquiry is not anticipated for the periods covered by the risk assessments. Such conclusions may be rolled forward to later periods, subject to discussions and conditions imposed by the applicable tax administrations. In the alternative, if a tax administration is unable to reach that required level of comfort, then the transaction will be deemed to be not low-risk, though this assessment does not necessarily mean that additional inquiry will be taken.

In 40% of the concluded ICAP cases (or eight of the cases), all of the main covered risk areas that were included in the scope of the risk assessment received low-risk outcomes. An additional 40% of taxpayers (or eight of the cases) primarily received an outcome of low-risk assessments for the covered risk areas, with the exception of one or two areas that were deemed not low-risk. Accordingly, of the 20 concluded ICAP cases, only four taxpayers (or 20%) received not low-risk assessments in more than two covered risk areas.

Issue resolution within ICAP

In certain cases where the tax administrations are unable to conclude that a covered transaction should not require further review, the ICAP process may include an issue resolution process. During this issue resolution process, an agreement may be reached between the taxpayer and the tax administrations as to the tax treatment of the covered issue, including potential tax adjustments. In 32% of the concluded ICAP cases, at least one issue was identified by the tax administrations during the risk assessment wherein the ICAP issue resolution process was used to resolve the potential dispute, thereby helping the taxpayer to avoid audit and MAP on such issues.

Process time

The ICAP process involves three stages: selection, risk assessment, and outcome. This entire process is intended to have a targeted timeframe between 28-52 weeks, though that can vary based on the complexity of the issues, with risk assessment targeted to take between 20 to 36 weeks. As demonstrated by the statistics, the overall average time from start to finish was quite a bit higher at 61 weeks, with the average risk assessment phase lasting over 42 weeks. The OECD attributes that delay in part to the impact of the COVID-19 pandemic as well as the inclusion of issue resolution within the time frame. Interestingly, while there was variation in the time involved in each stage of the process depending on the number of tax authorities involved, the involvement of a higher number of tax authorities did not necessarily take more time than those ICAP cases with a smaller number of tax administrations.


The OECD statistics overall show positive trends for ICAP in terms of its ability to provide taxpayers with some level of certainty regarding their intercompany transactions. Certainly, for taxpayers that have entirely or mostly routine transactions (particularly with respect to services and tangible goods transactions), ICAP seems to be a viable avenue to avoiding elongated multi-jurisdictional disputes and (hopefully) avoiding risk of double taxation. Likewise, taxpayers with PE-exposure are likely to benefit greatly from resolving potential PE risks via ICAP with participating jurisdictions.

It is not surprising that financial transactions and IP transactions received the lowest proportion of low-risk outcomes. Thus, taxpayers that engage in intangibles transactions, including hard-to-value intangibles, and financing transactions, may not find ICAP to be an appealing process.

Even for those with more routine transactions, the avoidance of elongated disputes is not assured through ICAP, given that the ICAP outcome is not binding on the tax administrations. Nevertheless, the OECD highlights that ICAP can provide taxpayers with a degree of “practical certainty,” particularly as some tax administrations have introduced domestic measures to recognize the value of a low-risk assessment. This certainly is a helpful step that we encourage to be taken by all tax administrations that are party to ICAP processes, particularly if tax administrations want to encourage further participation in the ICAP program.

What is not clear from the MAP statistics is the nature of the transactions that were deemed to be not low-risk. In other words, it is difficult to know if the 20 cases represented by these statistics are truly reflective of typical intercompany transactions or if they are already self-selected to be more routine/lower risk. Appreciating the limitations on sharing information, without additional detail on the nature/types of transactions underlying the statistics, it is difficult to fully analyze whether the ICAP program would be a reasonable dispute resolution process for all taxpayers.

In terms of the risk review and assessment, the statistics demonstrate that there is significant alignment among tax administrations in terms of what qualifies as “low risk” and what does not (e.g., in almost 90% of risk assessments of a particular core risk area, either zero or only one or two tax administrations concluded that the area was not low-risk). Further, in 32% of the cases, the tax administrations were able to resolve an issue within the ICAP process via the issue resolution process, avoiding the need for separate inquiries. These facts certainly help support the efficacy of the program in terms of avoiding multijurisdictional disputes and MAP.

Likewise, while the average time took longer than expected, it is not surprising given the novelty of the program as tax authorities work together and with taxpayers to analyze transfer pricing and international tax issues. This time frame is certainly compelling compared to the longer time frames taxpayers typically face in resolving issues via MAP (including domestic resolution procedures) or APA.

Overall, we are encouraged by these statistics and believe that they show ICAP to be a potentially viable and valuable avenue for taxpayers to resolve multilateral transfer pricing and international tax issues in advance, particularly where those taxpayers are primarily engaged in routine transactions. Those taxpayers must be prepared to share a significant amount of information with the participating tax administrations, however, and will not receive in return the benefit of legal certainty afforded through MAP and APAs. In addition, for taxpayers that are engaging in IP, financial, or other “higher-risk” transactions, ICAP may not be the best avenue to resolve issues. Taxpayers should continue to carefully consider the various avenues available to resolving potential or existing transfer pricing disputes, and we appreciate tax administrations’ efforts to expand access to dispute resolution tools, such as through ICAP, APAs, and MAP.


Salim Rahim is the chair of the Firm's North America Tax Practice Group. He has extensive experience in transfer pricing matters, including transfer pricing planning, compliance, and tax controversy. He has represented clients in all administrative phases of a controversy. Salim has also represented companies in various alternative dispute resolution forums, particularly the Advance Pricing & Mutual Agreement Program.
Salim is a frequent speaker on transfer pricing matters in seminars sponsored by various organizations and universities. He also participates in programs sponsored by Bloomberg BNA, Alliance for Tax, Legal and Accounting Seminars (ATLAS), Tax Executives Institute (TEI), International Tax Review, Organization for International Investment and the American Bar Association.


Amanda Worcester Martin is a partner within the Firm’s Global Tax Practice. She routinely advises companies on a variety of corporate and international tax matters, particularly in the areas of transfer pricing, tax controversy involving international tax issues, and corporate M&A matters.

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